EX-99.1 2 a4749873ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Kimco Realty Reports Third Quarter Operating Results and 13th Consecutive Annual Dividend Increase NEW HYDE PARK, N.Y.--(BUSINESS WIRE)--Oct. 26, 2004--Kimco Realty Corporation (NYSE:KIM): Highlights: -- Income From Continuing Operations Increased 16.0%, 13.0% Per Share -- Funds From Operations Increased 12.2%, 8.5% Per Share -- Board of Directors Increases Quarterly Common Stock Dividend 7.0% -- Management Increases 2004 and 2005 Earnings Guidance -- Acquired 30 Property Interests Totaling $196.3 Million of Gross Investment -- Portfolio Occupancy Increased 50 Basis Points During the Quarter to 92.9% Kimco Realty Corporation (NYSE:KIM) today announced that income from continuing operations, which includes gain on sale of development properties, net, for the third quarter ended September 30, 2004 was $71.7 million compared to $61.9 million a year earlier, an increase of 16.0 percent. On a diluted per share basis, income from continuing operations increased 13.0 percent to $0.61 from $0.54 in the third quarter of 2003. Net income for the quarter was $78.5 million compared to $91.5 million a year earlier. The decline in net income was the result of lower gains on sales of operating properties. Net income for the current quarter included $6.8 million from discontinued operations compared to $29.7 million from discontinued operations in the third quarter of 2003. Discontinued operations include net gains on dispositions of operating real estate of $5.5 million and $28.1 million in the third quarter of 2004 and 2003, respectively. Net income per diluted common share for the quarter was $0.67 compared to $0.81 a year earlier. Kimco's third quarter funds from operations ("FFO"), a widely accepted supplemental measure of REIT performance, rose 12.2 percent to $101.6 million from $90.6 million for the same period last year. On a diluted per common share basis, third quarter FFO increased 8.5 percent to $0.89 from $0.82 a year ago. Funds from operations excludes gains on dispositions of operating properties net of minority interests and joint venture properties of approximately $8.0 million, or $0.07 per diluted common share in 2004 and $28.1 million, or approximately $0.25 per diluted common share, in 2003. For the nine months ended September 30, 2004, income from continuing operations increased 14.8 percent to $211.4 million from $184.1 million for the same period last year. Income from continuing operations per diluted common share increased 17.0 percent to $1.79 from $1.53 a year ago. Net income for the nine months was $221.3 million, or $1.88 per diluted common share compared to $223.8 million, or $1.90 per diluted common share a year earlier. Net income for the period included $9.9 million from discontinued operations compared to $39.7 million from discontinued operations a year ago. Discontinued operations includes net gains on dispositions of operating real estate of $7.4 million and $30.5 million for the nine-month period ended September 30, 2004 and September 30, 2003, respectively. Funds from operations rose 17.5 percent to $301.7 million for the nine-month period from $256.8 million in the year earlier period. On a diluted per common share basis, FFO for the nine-month period increased 11.3 percent to $2.65 from $2.38, a year ago. Funds from operations for the nine months ended September 30, 2004 excludes gains on dispositions of operating properties net of minority interests and joint venture properties of $14.9 million or approximately $0.13 per diluted common share and $30.5 million or approximately $0.28 per diluted common share for the same period last year. Funds from operations for the nine-month period ended September 30, 2003 also reflects a $7.8 million non-cash adjustment, or $0.07 per diluted common share, associated with the original issuance costs of Kimco's $225 million preferred stock that was redeemed during the second quarter of 2003. Funds from operations (FFO) is a supplemental non-GAAP financial measure used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income to FFO is included in this release. During the quarter, Kimco's parent portfolio occupancy increased to 92.9 percent from 92.4 percent at June 30, 2004 and 89.5 percent a year earlier. The increase in occupancy was the result of new leasing, acquisition activity and property sales. For the quarter, Kimco signed 138 new leases in this portfolio totaling 676,000 square feet. Year to date the Company has signed 414 new leases in this portfolio totaling approximately 2.7 million square feet of gross leasable area. Dividend Increase & Lead Director Named Kimco's Board of Directors approved a common stock dividend increase, raising the quarterly dividend payable per common share by 7.0 percent to $0.61 per common share from the current quarterly level of $0.57 per common share. Kimco has raised its dividend for 13 consecutive years, from an initial annual rate of $0.78 per share (adjusted for stock splits) in 1992 to the current annual rate of $2.44 per share, a compound annual growth rate of 9.2 percent. The current level of increase is consistent with the Company's objective of maintaining a conservative dividend payout ratio while providing shareholders a growing source of income. The Board declared the first quarterly dividend at the increased rate payable on January 18, 2005 to shareholders of record on January 3, 2005. The Board of Directors also appointed Richard G. Dooley, Lead Director. Mr. Dooley has been a Director of the Company since 1991, Chairman of the Nominating and Corporate Governance Committee of the Board of Directors and served as Executive Vice President and Chief Investment Officer of Massachusetts Mutual Life Insurance Company from 1978 to 1993. Investment Activity Kimco recently entered into a joint venture with DRA Advisors LLC to acquire Price Legacy Corporation (NASDAQ: PLRE) in a transaction valued at approximately $1.3 billion. Kimco will be a 15 percent partner and manage the properties on behalf of the venture. Price Legacy consists of approximately 33 shopping centers located primarily in California, Florida and Arizona. The closing of this transaction is subject to the approval of Price Legacy's stockholders and other customary closing conditions for transactions of this type. Separately, Kimco recently acquired interests in 26 properties, one development project located in Sudbury Ontario and three development projects located in Mexico for a total of $196.3 million of gross investment. The shopping center acquisitions and development activities are as follows: Domestic Acquisitions -- As previously announced, Kimco acquired from Kmart, the Mission Bell shopping center in Tampa, Florida, for approximately $16.8 million. This 168,000 square foot shopping center is a redevelopment project currently anchored by Kmart on a short-term lease. Kimco is working closely with another national retailer to replace Kmart at the site. -- Palm Aire Marketplace located in Pompano, Florida was acquired for $20.4 million in a partnership with DRA Advisors. The 140,000 square foot property is 94.0 percent leased to 28 tenants. -- Kimco acquired a 50 percent partnership interest in a 170,000 square foot former Kmart site in Valdosta, Georgia for approximately $10.7 million. Lowes, a national home improvement retailer, is open and operating in the former Kmart space. -- The Company acquired a portfolio of 11 properties located in the New York Metropolitan area for approximately $84.5 million. Ten of the properties are leased to Duane Reade and one is leased to Rite Aid, with leases that are substantially below market and remaining terms that expire in approximately nine years. -- Additionally, Kimco, in its joint venture with GE Real Estate, entered into a contract to acquire the RioNorte Shopping Center, a 237,000 square foot shopping center in Laredo, Texas for approximately $23.6 million. Closing on this transaction is expected within the current quarter. International Activities -- As previously announced, Kimco closed on the third phase of Sudbury Shopping Centre, a joint venture development between Kimco, RioCan and Trinity Development Group. The total development budget for this project is approximately $26.0 million to construct an additional 170,000 square feet of gross leasable area. -- Kimco entered into a joint venture with G. Accion to develop a Wal-Mart anchored shopping center in Huehuetoca, Mexico. The project, which will also include a McDonald's restaurant and other local tenants, is expected to cost approximately $14.0 million upon completion in the second quarter of 2005. -- The Company completed a joint venture agreement to develop a 125,000 square foot H-E-B anchored shopping center in San Luis, Mexico. H-E-B, a Texas based grocery retailer with more than 300 stores in Texas and Mexico, is expected to open for operations in the fourth quarter of 2004. Total development cost for this project is expected to be $12.7 million upon completion. -- Kimco acquired a 23.6 acre parcel of land for a $25.3 million development project in Reynosa, Mexico. H-E-B and The Home Depot will co-anchor this development. -- The Company acquired a preferred equity interest in a 1.1 million square foot portfolio of six enclosed shopping centers located in the province of Quebec, Canada for $9.6 million. Five of the shopping centers are anchored by grocery stores that generate sales between C$475 and C$725 per square foot. Separately, Kimco invested $26.9 million in six additional preferred equity transactions. Kimco's preferred equity portfolio has grown to include 50 properties with an aggregate commitment of approximately $142.0 million. Kimco completed the transfer of six properties to its co-investment programs representing approximately $106.8 million of property value. Kimco will continue to manage the properties on behalf of the ventures under long-term incentive management agreements. Kimco currently has approximately $3.8 billion of assets under management in these programs. Management and other fee income for the quarter increased 41.1 percent to $6.0 million from $4.3 million, a year ago. Kimco's merchant building business, Kimco Developers Inc. (KDI), completed the sale of one shopping center and sold portions of two additional projects generating proceeds of $34.1 million. These property sales resulted in gains on sales of approximately $1.6 million, net of tax. Several pad sites and two shopping center projects are currently under contract for sale in the fourth quarter of 2004. In addition, KDI acquired three new projects for a total of $23.8 million and invested approximately $22.3 million in its pipeline of 24 existing shopping center developments. Kimco continued to make strategic property sales, disposing of five properties from the parent portfolio generating proceeds of $39.6 million, and three properties from the Kimco / GE joint venture generating proceeds of $44.2 million. Additionally, Kimco sold three shopping centers from its Kimsouth portfolio for proceeds of approximately $19.0 million. The Kimsouth portfolio, which was acquired in November 2002, originally consisted of 37 shopping centers and currently has 14 properties remaining. Increased Earnings Guidance As a result of the Company's continued strong operating results, Kimco's management increased its projection for FFO to $3.55 for the full year ending December 31, 2004. This estimate is $0.02 above the guidance management provided last quarter. Management also increased its guidance for FFO for the year ending December 2005 to between $3.77 and $3.83. Kimco's prior guidance for FFO in 2005 was between $3.75 and $3.82. Kimco, a publicly-traded real estate investment trust, has specialized in shopping center acquisitions, development and management for over 45 years. Kimco owns and operates one of the nation's largest portfolios of neighborhood and community shopping centers with interests in 718 properties comprising approximately 104.0 million square feet of leasable space located throughout 42 states, Canada and Mexico. For further information refer to the Company's web site at www.kimcorealty.com. Safe Harbor Statement: The statements in this release state the Company's and management's hopes, intentions, beliefs, expectations or projections of the future and are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, but are not limited to, (i) general economic conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or general downturn in their business, (iii) local real estate conditions, (iv) increases in interest rates, (v) increases in operating costs and real estate taxes. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's report on Form 10-K for the year ended December 31, 2003. Copies of each filing may be obtained from the Company or the SEC. Kimco Realty Corporation Condensed Consolidated Statements of Income (In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 -------- -------- -------- -------- Revenues from rental property $123,274 $117,409 $392,219 $350,038 -------- -------- -------- -------- Rental property expenses: Rent 2,667 2,688 8,446 8,060 Real estate taxes 16,266 15,533 49,660 44,396 Operating and maintenance 12,461 11,590 42,637 39,549 -------- -------- -------- -------- 31,394 29,811 100,743 92,005 -------- -------- -------- -------- Net operating income 91,880 87,598 291,476 258,033 Income from other real estate investments 5,119 5,998 20,414 15,807 Mortgage financing income 3,179 3,713 9,637 15,963 Management and other fee income 6,008 4,259 18,836 10,822 Depreciation and amortization (24,304) (20,960) (76,961) (59,519) -------- -------- -------- -------- 81,882 80,608 263,402 241,106 Interest, dividends and other investment income 8,595 5,633 13,170 13,204 Other income / (expense), net 4,974 263 13,216 (837) Interest expense (25,845) (26,094) (81,447) (73,865) General and administrative expenses (11,034) (11,232) (31,660) (28,720) Gain on early extinguishment of debt -- -- -- 2,921 -------- -------- -------- -------- 58,572 49,178 176,681 153,809 Benefit (provision) for income taxes 24 (1,171) (5,395) (3,686) Equity in income of real estate joint ventures, net 13,864 11,167 39,792 30,459 Minority interests in income of partnerships, net (2,312) (2,323) (7,059) (5,662) -------- -------- -------- -------- Income from continuing operations 70,148 56,851 204,019 174,920 -------- -------- -------- -------- Discontinued Operations: ----------------------- Income from discontinued operating properties 1,319 1,601 2,473 5,882 Gain on early extinguishment of debt -- -- -- 3,341 Loss on operating properties held for sale/sold (913) -- (5,064) -- Gain on disposition of operating properties 6,386 28,053 12,498 30,465 -------- -------- -------- -------- Income from discontinued operations 6,792 29,654 9,907 39,688 -------- -------- -------- -------- Gain on sale of development properties, net of tax of $1,047, $3,333, $4,935 and $6,134, respectively (1) 1,571 4,999 7,404 9,202 -------- -------- -------- -------- Net income 78,511 91,504 221,330 223,810 Original issuance costs associated with the redemption of preferred stock(1) -- -- -- (7,788) Preferred stock dividends (2,909) (2,909) (8,728) (11,759) --------- ------- -------- -------- Net income available to common shareholders $ 75,602 $88,595 $212,602 $204,263 ======== ======== ======== ======== Per common share: Income from continuing operations: - Basic $ 0.62 $ 0.55 $ 1.82 $ 1.55 ======== ======== ======== ======== - Diluted (2) $ 0.61 $ 0.54 $ 1.79 $ 1.53 ======== ======== ======== ======== Net income: - Basic $ 0.68 $ 0.82 $ 1.91 $ 1.93 ======== ======== ======== ======== - Diluted (2) $ 0.67 $ 0.81 $ 1.88 $ 1.90 ======== ======== ======== ======== Income subject to income taxes $ 2,585 $11,167 $ 26,313 $ 25,315 Weighted Average Share Information Three Months Nine Months Ended Ended September 30, September 30, For earnings per share calculations: 2004 2003 2004 2003 -------- -------- -------- -------- Weighted average shares - - Basic 111,526 107,909 111,151 105,945 ======== ======== ======== ======== - Diluted(2) 113,621 109,853 113,259 107,484 ======== ======== ======== ======== Note: Reclassifications: Certain amounts in the prior period have been reclassified in order to conform with the current period's presentation. (1) Included in the calculation of income from continuing operations per share in accordance with SEC guidelines. (2) The potential impact if certain units were converted to common stock at the beginning of the period would have an anti-dilutive effect on net income and therefore have not been included. Kimco Realty Corporation Funds From Operations (In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 -------- -------- -------- -------- Funds From Operations(1) Net income $ 78,511 $ 91,504 $221,330 $223,810 Gain on disposition of operating properties, net of minority interests (6,386) (28,053) (12,065) (30,465) Gain on disposition of joint venture operating properties (1,637) -- (2,860) -- Depreciation and amortization 24,395 21,912 77,608 62,492 Depreciation and amortization - real estate joint ventures 9,631 8,111 26,443 20,511 Redemption costs -- -- -- (7,788) Preferred stock dividends (2,909) (2,909) (8,727) (11,759) -------- -------- -------- -------- Funds from operations(1) $101,605 $ 90,565 $301,729 $256,801 ======== ======== ======== ======== Per common share: - Basic $ 0.91 $ 0.84 $ 2.71 $ 2.42 ======== ======== ======== ======== - Diluted (2) $ 0.89 $ 0.82 $ 2.65 $ 2.38 ======== ======== ======== ======== Weighted Average Share Three Months Ended Nine Months Ended Information September 30, September 30, 2004 2003 2004 2003 -------- -------- -------- -------- Weighted average shares - - Basic 111,526 107,909 111,151 105,945 ======== ======== ======== ======== - Diluted (2) 116,004 112,236 115,642 109,888 ======== ======== ======== ======== (1) Most industry analysts and equity REITs, including the Company, generally consider funds from operations ("FFO") to be an appropriate supplemental measure of the performance of an equity REIT. FFO is defined as net income applicable to common shares before depreciation and amortization, extraordinary items, cumulative effect of accounting changes, gains on sales of operating real estate, plus the pro-rata amount of depreciation and amortization of unconsolidated joint ventures, net of minority interests, determined on a consistent basis. Given the nature of the Company's business as a real estate owner and operator, the Company believes that FFO is helpful to investors as a measure of its operational performance. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and therefore should not be considered an alternative for net income as a measure of liquidity. In addition, the comparability of the Company's FFO with the FFO reported by other REITs may be affected by the differences that exist regarding certain accounting policies relating to expenditures for repairs and other recurring items. (2) Reflects the potential impact if certain units were converted to common stock at the beginning of the period. Funds from operations would be increased by $1,502 and $1,423 for the three months ended September 30, 2004 and 2003, respectively, and $4,506 and $4,269 for the nine months ended September 30, 2004 and 2003, respectively, reflecting the distributions associated with these units. Kimco Realty Corporation Condensed Consolidated Balance Sheets (In thousands, except per share data) September 30, December 31, 2004 2003 -------------- -------------- Assets: Operating real estate, net of accumulated depreciation of $615,380 and $568,015, respectively $ 2,910,689 $ 3,264,223 Investments and advances in real estate joint ventures 498,764 487,394 Real estate under development 294,980 304,286 Other real estate investments 150,239 113,085 Mortgages and other financing receivables 128,953 101,691 Cash and cash equivalents 134,031 48,288 Marketable securities 64,455 45,677 Accounts and notes receivable 51,503 50,408 Other assets 143,504 188,872 -------------- -------------- $ 4,377,118 $ 4,603,924 ============== ============== Liabilities: Notes payable $ 1,377,250 $ 1,686,250 Mortgages payable 316,935 375,914 Construction loans payable 125,052 92,784 Other liabilities 244,039 213,213 -------------- -------------- 2,063,276 2,368,161 -------------- -------------- Minority interests in partnerships 102,587 99,917 -------------- -------------- Stockholders' Equity: Preferred stock, $1.00 par value, authorized 3,600,000 shares Class F Preferred Stock, $1.00 par value, authorized 700,000 shares Issued and outstanding 700,000 shares 700 700 Aggregate liquidation preference $175,000 Common Stock, $.01 par value, authorized 200,000,000 shares Issued and outstanding 112,042,471 and 110,623,967 shares, respectively 1,120 1,106 Paid-in capital 2,188,533 2,147,286 Cumulative distributions in excess of net income (8,068) (30,112) -------------- -------------- 2,182,285 2,118, 980 Accumulated other comprehensive income 28,970 16,866 -------------- -------------- 2,211,255 2,135,846 -------------- -------------- $ 4,377,118 $ 4,603,924 ============== ============== Reclassifications: Certain amounts in the prior period have been reclassified in order to conform with the current period's presentation. Kimco Realty Corporation Reconciliation of Projected Diluted Net Income Per Common Share to Projected Funds From Operations Per Common Share Projected Projected Range Full Year Full Year 2005 2004 Low High -------- -------- -------- Projected diluted earnings per common share $ 2.49 $ 2.57 $ 2.63 Projected depreciation and amortization 0.88 0.84 0.84 Projected depreciation and amortization real estate joint ventures, net of minority interests 0.31 0.36 0.36 Gain on disposition of operating properties (0.10) -- -- Gain on disposition of joint venture operating properties, net of minority interests (0.03) -- -- -------- -------- -------- Projected FFO per diluted common share $ 3.55 $ 3.77 $ 3.83 ======== ======== ======== Projections involve numerous assumptions such as rental income (including assumptions on percentage rent), interest rates, tenant defaults, occupancy rates, foreign currency exchange rates (such as the US-Canadian rate), selling prices of properties held for disposition, expenses (including salaries and employee costs), insurance costs and numerous other factors. Not all of these factors are determinable at this time and actual results may vary from the projected results, and may be above or below the range indicated. The above range represents management's estimate of results based upon these assumptions as of the date of this press release. CONTACT: Kimco Realty Corporation Scott Onufrey, 516-869-7190 sonufrey@kimcorealty.com